Chapter 12, Problem 2.6C

why we developed new probability distribution day by day from transformations?

Donald Harris received a windfall and needs to invest it for tax reasons. He went to his brother-in-law, Joe Harris, who is a financial advisor. Joe prepared a matrix that illustrated the possible returns on investment for different investment strategies under different economic conditions. That matrix is given below. Donald Harris reads the Wall Drive Journal and came across an article that stated that the probability that there would be a major downturn would be 10%; the probability of a downturn would be 30%; the probability of an upturn would be 40%; and that the probability of a major upturn would be 20%. Based on these numbers, what investment strategy should Donald Harris adopt?   Future Air Traffic Strategies Major Downturn Downturn Upturn Major Upturn Contrarian 20% 10% 5% -15% Risk Averse 2% 4% 7% 10% Growth -10% -8% 13% 20% Aggressive -25% -20% 11% 35% Group of answer choices

A NY Times best-selling author wants to write a new book as either volume II of her earlier successful book or an autobiography. She believes that by writing the volume II, given her previous success, she will have a 50% chance of placing it with a major publisher where it should ultimately sell about 40,000 copies. However, the worst-case scenario, if she can’t get a major publisher to take it, then she thinks there is 80% chance of placing it with a smaller publisher, with sales of 30,000 copies. On the other hand, if she writes an autobiography, considering the potential interest in her journey as successful writer, she thinks there will be 40% chance of placing it with a major publisher, and it should result in ultimate sales of about 50,000 copies. If she can’t get a major publisher to take it, the worst-case scenario, she thinks there is a 50% chance of placing it with a smaller publisher, with ultimate sales of 35,000 copies.    Construct a decision tree to help this author…

Eight years ago, Burt Brownlee purchased a government bond that pays 3.60 percent interest. The face value of the bond was $1,000. What is the dollar amount of annual interest that Burt received from his bond investment each year? Assuming that comparable bonds are now paying 2.40 percent, will Burt's bond increase or decrease in value? Why did the bond increase or decrease in value?

Why distribution range negative infinity to positive infinity is transformed to zero to positive infinity? ( probability distribution)

The table below gives a discrete probability distribution. x Pr{X= x} 2 0.3766 8 0.2546 14 0.1728 20 0.1168 26 0 Calculate the theoretically exact mean, u , variance, sigma^2 , and standard deviation,sigma , for the distribution. Summary metrics:                                                                                             Enter your answer as a comma separated list to four decimal places, e.g. 0.1234, 0.2324, 0.4567, etc.

A salesperson uses three different airlines. The probabilities of switching from one airline to another in consecutive flights are shown below. If the last flight was on Delta, what is the probability that the next was on American?   American Delta Southwest American 0.5 0.25 0.25 Delta 0.2 0.6 0.2 Southwest 0.3 0.3 0.4 A   0.5 B   0.2 C   0.25 D   0.6

You are attempting to establish the utility that your boss assigns to a payoff of $1,000. You have established that the utility for a payoff of $0 is zero and the utility for a payoff of $10,000 is one. Your boss has just told you that they would be indifferent between a payoff of $1,000 and a lottery which has a payoff of $10,000 where the probability of losing is 0.7. What is your boss' utility for $1,000? (Round your answer to 1 decimal place.) Utility of $1,000

Topgun Records and several movie studios have decided to sign a revenue-sharing contract for CDs. Each CD costs the studio $2 to produce. The CD will be sold to Topgun for $3. Topgun, in turn, prices a CD at $15 and forecasts demand to be normally distributed, with a mean of 5,000 and a standard deviation of 2,000. Any unsold CDs are discounted to $1, and all sell at this price. Topgun will share 35 percent of the revenue with the studio, keeping 65 percent for itself. How many CDs should Topgun order? How many CDs does Topgun expect to sell at a discount? What is the profit that Topgun expects to make? What is the profit that the studio expects to make? Repeat parts (a)–(d) if the studio sells the CD for $2 (instead of $3) but gets 43 percent of revenue.